| gen. |
mezzanine debt (a debt taken on to finance a business that involves a high rate of interest with the right to buy shares in the business in the future. In terms of repayment it is ranked below senior debt but above equity: BC Partners purchase of Foxtons for £380m was financed by £180m of senior debt, £70m of mezzanine debt and £130m of equity. Other ⃝ subordinated debt|mezzanine financing|mezzanine funding Additional Notes ⃝ Also known as mezzanine financing. Mezzanine financing relies on very high interest rates in the 20-30% range to make it profitable. Unlike a bank loan, mezzanine financing does not hold real assets of a company as collateral; instead, lenders offering mezzanine financing have the right to convert their stake to an equity or ownership in the event of a default on the loan. ⃝ Mezzanine financing is often used for large projects when senior debt providers will not provide all of the funding required as they wish other parties to take on some of the risks of the project. TED Alexander Demidov) |
